Gold holds four-day drop as Fed 'procession' signals rate rise
[SINGAPORE] Gold held a four-day decline as more Federal Reserve officials weighed in with comments that supported the case for higher borrowing costs, strengthening the outlook for the dollar and denting the metal's allure.
Bullion for immediate delivery traded at US$1,248.20 an ounce at 9:15 am in Singapore, from US$1,249.13 on Monday, when it fell 0.2 per cent to the lowest close since April 27, according to Bloomberg generic pricing. It's dropped for the past three weeks as the US currency has advanced.
Gold's retreat this month has eroded its gains in 2016 as traders start to price in higher chances of a US rate increase sooner rather than later after comments from a slew of policy makers and the minutes of the Fed's April meeting.
On Monday, Fed Bank of Philadelphia President Patrick Harker said that he could see two to three rate hikes in 2016, while San Francisco Fed chief John Williams said two to three increases this year are still "about right." Chair Janet Yellen speaks at Harvard University on Friday.
"Increasing chances of a rate hike in June are likely to continue to weigh on gold," Australia & New Zealand Banking Group Ltd said in a report, citing what it described as a procession of Fed speakers who'd made the case for a normalization in interest rate policy.
The odds of a move next month have more than doubled to 32 per cent since the start of May, according to futures bets tracked by Bloomberg.
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